Grocery store bonds quiver after Amazon announcement

NEW YORK :Grocery store bonds had a mixed reaction to online retailer Amazon's intention to slash prices on popular Whole Foods items as it prepares to complete its purchase of the chain on Monday.

Bonds issued by investment-grade supermarket chain Kroger widened by as much as 7bp Thursday, with its 4.450% 2047s falling 1.318 points to 95.8 cents on the dollar, according to Market Axess data.

But by Friday, Kroger's bonds were either unchanged to 3bp tighter, as the market grew more sanguine about the company's future. The 4.450% 2047s were up 0.525 points to trade at 96.327.

Shares of Kroger and Wal-Mart Stores were among the hardest hit in the retail space on Thursday - losing more than 8% and 2% respectively - but they similarly pared back some losses on Friday.

In the junk bond market, which is home to companies with more leveraged balance sheets or weaker fundamentals, debt prices were largely ending the week lower.

A 9.75% 2023 bond issued by The Fresh Market - a direct competitor of Whole Foods for organic and gourmet products - dropped to an all-time low of 77.9 for an eye-watering yield of nearly 16% on Friday.

The notes, issued last year to help finance Apollo Global Management's LBO of the company, partly recovered later in the day but were still down over three points on the week, according to MarketAxess.

Albertsons' 5.75% 2025s were down 1.75 points on Friday at 90.75 to trade at a yield of 7.4%, while its 6.625% were a touch higher on the day at 95.9. But both securities were set to end the week over a point lower.